ISLAMABAD: Finance Minister Miftah Ismail has said that the government has imposed supertax on the factories owned by the Prime Minister’s sons and his (Miftah’s) own businesses.
According to a tweet of the Finance Minister Miftah Ismail on Sunday, “everyone talks about the benefit of direct taxes and now that we have done that, and imposed a one-time supertax from one percent to 10 percent on companies and individuals earning a minimum of 15 crore, why so much consternation? This year we will have a Tax-to-GDP ratio of 8.6 percent, one of lowest in the world. This year we will have a primary deficit of about Rs 1600 billion, after agreeing with the IMF in February that it would only be Rs 25 billion. I have to make an adjustment of Rs 1750 billion in primary deficit in one year. This isn’t easy or trivial.
After 4 record budget deficits under PTI I am not going to run another ruinous deficit. This year, after 4 years of PTI, we will have the highest trade deficit. I must contain this unsustainable current account deficit. The alternative is default. The 3 highest current account deficits (CADs) in history are 2007/08, 2017/18 and this year 2021/22. This has been a fiscally irresponsible year and I have to contain the damage.
“What did I do? I super-taxed the factories owned by the PM’s sons. I super-taxed my own businesses. This has to be a shared sacrifice. Those of us who are rich have to come forward and pay. Most kids passing matriculation exams from government schools cannot even write two sentences in Urdu or calculate percentages. We are failing our children. We are not providing adequate healthcare to most poor citizens. Our governments have to do better in the limited resources we have. We must make the field even for rich and poor. My job is to provide adequate resources to our governments and of course to ensure we meet our international financial commitments. And InshaAllah I will make sure of that”, the tweet of Finance Minister added.
However, leading chartered accountant and former Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has said it is the first time in history of any parliamentary system that a substantial tax (supertax) with retrospective effect has been levied without any paper available to Members of National Assembly.
On the issue of supertax, Shabbar Zaidi tweeted, this is the value we give to parliament & then we complain about weak democracy.
Pakistan Business Council (PBC) has said that the “supertax” is regressive and will limit reinvestment of profits and reduce dividends to pensioners, widows and small shareholders.
The tweet of PBC on Sunday said that the impact of supertax on listed companies with external shareholders - pensioners, retail investors, etc, is that for every Rs 100 pre-tax profit, assuming full dividend payout, the state will now get Rs 52 & the shareholder Rs 48. Not a fair risk/ reward ratio, it said.
PBC questioned can the Finance Minister will ensure that all pending tax refunds and rebates are settled on July 1 to live up to the promise of his budget speech. It would be a great start to restore business confidence, especially those affected by Super Tax. Let’s make a fresh start.
“Supertax is regressive: It is retrospective; it limits reinvestment of profit; it reduces dividends to pensioners, widows & small shareholders, not all of whom are “rich”. What’s going for it are optics and expediency, tweet added.
Copyright Business Recorder, 2022